26 U.S. Code § 137 - Adoption assistance programs

Gross income of an employee does not include amounts paid or expenses incurred by the employer for qualified adoption expenses in connection with the adoption of a child by an employee if such amounts are furnished pursuant to an adoption assistance program.

(2) $10,000 exclusion for adoption of child with special needs regardless of expenses

In the case of an adoption of a child with special needs which becomes final during a taxable year, the qualified adoption expenses with respect to such adoption for such year shall be increased by an amount equal to the excess (if any) of $10,000 over the actual aggregate qualified adoption expenses with respect to such adoption during such taxable year and all prior taxable years.

(b) Limitations

(1) Dollar limitation

The aggregate of the amounts paid or expenses incurred which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000.

(2) Income limitation

The amount excludable from gross income under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so excludable (determined without regard to this paragraph but with regard to paragraph (1)) as—

(A)the amount (if any) by which the taxpayer’s adjusted gross income exceeds $150,000, bears to

(B)$40,000.

(3) Determination of adjusted gross income

For purposes of paragraph (2), adjusted gross income shall be determined—

For purposes of this section, an adoption assistance program is a separate written plan of an employer for the exclusive benefit of such employer’s employees—

(1)under which the employer provides such employees with adoption assistance, and

(2)which meets requirements similar to the requirements of paragraphs (2), (3), (5), and (6) of section
127(b).

An adoption reimbursement program operated under section
1052 of title
10, United States Code (relating to armed forces) or section
514 of title
14, United States Code (relating to members of the Coast Guard) shall be treated as an adoption assistance program for purposes of this section.

(d) Qualified adoption expenses

For purposes of this section, the term “qualified adoption expenses” has the meaning given such term by section
23(d) (determined without regard to reimbursements under this section).

(e) Certain rules to apply

Rules similar to the rules of subsections (e), (f), and (g) ofsection
23 shall apply for purposes of this section.

(f) Adjustments for inflation

In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in subsection (a)(2) and paragraphs (1) and (2)(A) of subsection (b) shall be increased by an amount equal to—

(1)such dollar amount, multiplied by

(2)the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2001” for “calendar year 1992” in subparagraph (B) thereof.

If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.

Subsec. (f). Pub. L. 111–148, § 10909(a)(2)(C), (c), as amended by Pub. L. 111–312, temporarily amended subsec. (f) generally. See Effective and Termination Dates of 2010 Amendment note below. Prior to amendment subsec. (f) read as follows: “Adjustments for inflation.—In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in subsection (a)(2) and paragraphs (1) and (2)(A) of subsection (b) shall be increased by an amount equal to—

“(1) such dollar amount, multiplied by

“(2) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2001’ for ‘calendar year 1992’ in subparagraph (B) thereof.

If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.”

2002—Subsec. (a). Pub. L. 107–147, § 411(c)(2)(A), amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “Gross income of an employee does not include amounts paid or expenses incurred by the employer for adoption expenses in connection with the adoption of a child by an employee if such amounts are furnished pursuant to an adoption assistance program. The amount of the exclusion shall be—

“(1) in the case of an adoption of a child other than a child with special needs, the amount of the qualified adoption expenses paid or incurred by the taxpayer, and

“(2) in the case of an adoption of a child with special needs, $10,000.”

Subsec. (f). Pub. L. 107–147, § 418(a)(2), inserted at end “If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.”

2001—Subsec. (a). Pub. L. 107–16, § 202(a)(2), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “Gross income of an employee does not include amounts paid or expenses incurred by the employer for qualified adoption expenses in connection with the adoption of a child by an employee if such amounts are furnished pursuant to an adoption assistance program.”

Subsec. (b)(1). Pub. L. 107–16, § 202(b)(1)(B), substituted “subsection (a)(1)” for “subsection (a)” and “$10,000” for “$5,000 ($6,000, in the case of a child with special needs)”.

1997—Subsec. (b)(1). Pub. L. 105–34substituted “of the amounts paid or expenses incurred which may be taken into account” for “amount excludable from gross income”.

Effective and Termination Dates of 2010 Amendment

Amendment by Pub. L. 111–148terminated applicable to taxable years beginning after Dec. 31, 2011, and section is amended to read as if such amendment had never been enacted, see section 10909(c) ofPub. L. 111–148, set out as a note under section
1 of this title.

Amendment by Pub. L. 111–148applicable to taxable years beginning after Dec. 31, 2009, see section 10909(d) ofPub. L. 111–148, set out as a note under section
1 of this title.

Effective Date of 2004 Amendments

Amendment by Pub. L. 108–357applicable to taxable years beginning after Dec. 31, 2004, see section 102(e) ofPub. L. 108–357, set out as a note under section
56 of this title.

Amendment by Pub. L. 108–311effective as if included in the provisions of the Job Creation and Worker Assistance Act of 2002, Pub. L. 107–147, to which such amendment relates, see section 403(f) ofPub. L. 108–311, set out as a note under section
56 of this title.

Effective Date of 2002 Amendment

Amendment by section 411(c)(2) ofPub. L. 107–147applicable to taxable years beginning after Dec. 31, 2002, except that amendment by section
411(c)(2)(B) applicable to taxable years beginning after Dec. 31, 2001, see section 411(c)(3) ofPub. L. 107–147, set out as a note under section
23 of this title.

Amendment by section 418(a)(2) ofPub. L. 107–147effective as if included in the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107–16, to which such amendment relates, see section 418(c) ofPub. L. 107–147, set out as a note under section
21 of this title.

Effective Date of 2001 Amendment

Amendment by section 202(b)(1)(B), (2)(B), (d)(2), (e)(2) ofPub. L. 107–16applicable to taxable years beginning after Dec. 31, 2001, see section 202(g)(1) ofPub. L. 107–16, set out as a note under section
23 of this title.

Amendment by section 202(a)(2) ofPub. L. 107–16applicable to taxable years beginning after Dec. 31, 2002, see section 202(g)(2) ofPub. L. 107–16, set out as a note under section
23 of this title.

Amendment by section 431(c)(1) ofPub. L. 107–16applicable to payments made in taxable years beginning after Dec. 31, 2001, see section 431(d) ofPub. L. 107–16, set out as a note under section
62 of this title.

Effective Date of 1998 Amendment

Amendment by Pub. L. 105–277effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) ofPub. L. 105–277, set out as a note under section
86 of this title.

Effective Date of 1997 Amendment

Amendment by Pub. L. 105–34effective as if included in the provisions of the Small Business Job Protection Act of 1996, Pub. L. 104–188, to which it relates, see section 1601(j) ofPub. L. 105–34, set out as a note under section
23 of this title.

Effective Date

Section applicable to taxable years beginning after Dec. 31, 1996, see section 1807(e) ofPub. L. 104–188, set out as a note under section
23 of this title.

Transfer of Functions

For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security, and for treatment of related references, see sections
468(b),
551(d),
552(d), and
557 of Title
6, Domestic Security, and the Department of Homeland Security Reorganization Plan of November 25, 2002, as modified, set out as a note under section
542 of Title
6.

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